Legislators: pull plug on extending electric tax

Updated 11:37 pm, Thursday, January 31, 2013

HARTFORD -- A contingent of legislators is urging Gov. Dannel P. Malloy to abandon the idea of extending a temporary tax on electric plants enacted two years ago to help plug a huge state deficit.

"This tax was supposed to be temporary," said State Sen. Andrea Stillman, D-New London, whose district includes the Millstone nuclear power plants, which is paying the bulk of the electrical generation tax.

"They [Millstone] were asked to do their fair share. We are not sure where this stands but we do need to keep our word," Stillman said Thursday as more than a dozen legislators, business and labor leaders stood in solidarity - including newly elected State Sen. Andres Ayala, D- Bridgeport.

However, the governor does not appear to be backing down.

"Let's be clear -- extending a tax that is set to expire is not a tax increase," said Andrew Doba, Malloy's spokesman. The governor has promised not to increase taxes to cover the state's latest budget deficit.

"The fact is that generation rates have fallen 12% in the last two years. That means Connecticut residents are paying less for energy than they were two years ago. That means Connecticut businesses are paying less, so they can reinvest that money and create jobs," Doba said.

The generation tax is being paid by Millstone and the owners of other electric plants, including two in Bridgeport and one in Stamford. The tax, along with two other temporary levies, was enacted two years ago to help the state plug a $3.7 billion deficit.

All three levies are set to expire this year. But in an unexpected move, Gov. Malloy last week said he would not consider extending the taxes to be a tax increase, opening the door to retaining the $161 million in yearly revenue now being collected.

Malloy and the General Assembly are facing an estimated at 64.4 million deficit this fiscal year and $1.2 billion deficit for the 2014 fiscal year. The governor will propose a new state budget next week.

Stillman and others on Thursday tried to pressure the governor into allowing the taxes to sunset as planned, saying it's important for the state to keep its promise and warning that extending the levies could have economic consequences.

State Rep. Elizabeth Ritter, D-Waterford, said Millstone's owner opted not to pass the tax onto state ratepayers, who already pay the highest electric rates in the nation.

"They [Millstone] chose to pay the tax themselves and just bear it because it would sunset. What happens at that plant affects hundreds in my district. I feel pretty sure that if this tax continues it will be passed on in the form of higher rates," Ritter said.

She said the tax will also reduce her town's Grand List because it increases liability on the plant. That means the plant's assessed value will fall and the resulting loss in tax revenue will have to be made up by residential taxpayers, Ritter said.

Ken Holt, Millstone's spokesman, said last week the state should keep its promise. "A promise is a promise. If that tax does not expire the promise has been broken. It raises electric rates for people who now pay the highest rates in the continental U.S.," he said.

The electric tax is projected to bring in $71 million this year, with $42 million coming from Millstone. The tax is scheduled to expire June 30.

Another expiring tax is a 20 percent surcharge on corporations making more than $100 million a year, which is set to sunset Dec. 31. The tax is projected to generate $70 million this fiscal year. A credit limitation on the insurance premiums tax expired last month and revenue is estimated at $19 million this year.

"I hope the state understands we pay the highest electric taxes already. In this economy it's challenging to protect the jobs we have. The burden to Dominion [Millstone's owner] and others could result in the loss of hundreds of jobs," Brothers said.